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ARCHIVED - Telecom Decision CRTC 2004-8

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Telecom Decision CRTC 2004-8

  Ottawa, 12 February 2004
 

Public Interest Advocacy Centre - Part VII application for enforcement and relief regarding Bell Canada's unauthorized rate increases for party-line rental sets

  Reference: 8661-P8-02/02
  In this decision, the Commission finds that Bell Canada provided appropriate compensation to customers that could be located who were overcharged for party-line terminal sets. The Commission also finds that Bell Canada made a reasonable effort to find overcharged customers that were not located. The Commission notes that Bell Canada must provide full refunds, with interest, to any of these customers that come forward or that the company locates in the future.
 

The application

1.

The Commission received an application under Part VII of the CRTC Telecommunications Rules of Procedure, dated 14 August 2002, from the Public Interest Advocacy Centre (PIAC) on behalf of Bell Canada's residential party-line customers.

2.

PIAC submitted that Bell Canada had overcharged customers for party-line terminal sets and requested that the Commission:
  a) direct Bell Canada to provide a rebate, with interest, to customers that had been overcharged for party-line terminal sets;
  b) take further remedial action directing Bell Canada to:
 
  • further compensate affected customers for the improper charges by way of an additional credit of an amount at least equal to the rebate;
 
  • post security for use in any future instances of non-compliance with CRTC tariffs;
 
  • undergo an audit of its regulatory compliance by an independent third party; and/or
 
  • file a semi-annual compliance report, including a personal declaration from its Chief Executive Officer confirming that the company is in compliance with all Commission regulations relating to residential telephone service, and documenting any instances of non-compliance.

3.

PIAC also requested that the Commission determine whether other telephone companies have been overcharging for party-line terminal sets, and if so, make an order similar to that for Bell Canada.

4.

The Commission received comments from Bell Canada dated 9 September 2002, reply comments from PIAC dated 18 September 2002, further comments from Bell Canada dated 27 September 2002 and a further response from PIAC dated 30 September 2002. The Commission received a letter from Bell Canada dated 24 July 2003 providing information with respect to its refund program.
 

Positions of parties

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PIAC

5.

PIAC submitted that Bell Canada had overcharged customers for party-line terminal sets. PIAC stated that it had inquired about Bell Canada's rate for party-line terminal sets on behalf of a subscriber in March 2002 and was informed by a Bell Canada customer service representative (CSR) that $5.30 per month was the correct charge for this service. PIAC submitted that it had subsequently noticed in June 2002 that there was a discrepancy between that charge and the tariffed rate of $2.95 per month.

6.

PIAC further submitted that Bell Canada representatives continued to defend the invalid charge in response to several inquiries to Bell Canada between June and August 2002 regarding the discrepancy.

7.

PIAC indicated that, on 7 August 2002, Bell Canada confirmed that the approved rate was $2.95 and that the above-noted subscriber would be credited with the improperly billed amounts.

8.

PIAC submitted that Bell Canada was negligent in allowing the error to occur and failing to detect that error for over two years. PIAC further submitted that Bell Canada must take more effective measures to ensure ongoing compliance with its tariffs and to ensure that its CSRs can quickly and accurately answer straightforward questions about tariffed services. PIAC argued that given the general lack of awareness by Bell Canada's personnel of basic tariffs, the Commission should grant remedial orders in addition to reimbursement, as set out at paragraph 2 of this decision, using its enforcement powers under paragraph 55(c) of the Telecommunications Act (the Act).

9.

In addition, PIAC stated that under Article 19 of Bell Canada's Terms of Service, Bell Canada need not refund overbilled amounts unless they are disputed by the customer. PIAC submitted that it is inappropriate to put the onus on the customer when there is no reasonable way for a customer to determine that he or she has been overcharged. PIAC submitted that the Commission should revise Article 19 of Bell Canada's Terms of Service so as to give all overcharged customers a refund, not just those who dispute the improper charge.
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Bell Canada

10.

Bell Canada submitted that the relief sought by PIAC was unwarranted.
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Investigation of error

11.

Bell Canada stated that, in June 1999, it inadvertently failed to convert a number of party-line customers to a new Universal Service Order Code (USOC) corresponding to the regulated rate. Bell Canada stated that, as a result, these party-line customers were charged the unregulated rate for other terminal sets.

12.

Bell Canada stated that in late January 2002, when a discrepancy on a customer profile relating to the party-line terminal set rate was first detected, the company concluded that the problem may have been caused by errors made when new terminal set orders were keyed into the billing system. The company submitted that, after an investigation process, it received the analysis indicating the scope of the error in July 2002. Bell Canada further submitted that this report revealed that the incorrect billing problem was due to the conversion error in 1999.
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Refund plan

13.

Bell Canada submitted that, by August 2002, it had developed a refund program, including procedures, identification of funding, arrangement of communications, preparation of materials for inquiries and the correction of the USOC assignment.

14.

Bell Canada stated that, commencing 14 September 2002, affected active and non-active customers would receive a letter identifying that they have been overcharged for their party-line terminal sets and informing them that a full refund with interest would be provided. The company also submitted that it would allocate additional CSR resources to respond to inquiries from affected customers.

15.

By letter dated 24 July 2003, Bell Canada stated that it had provided refunds, with interest, to all affected customers that the company could locate, as set out below:
 

Number of customers refunded: 28,176 (over 90% of customers affected)

 

Total dollar amount of refunds: $1,190,000 (over 98% of the amount overcharged)

 

Average refund per customer: $43.23

16.

Bell Canada stated that it had attempted to track down inactive customers through information still on these customers' profiles, such as the final account address or a contact phone number. The company indicated that despite this activity, it could not locate 2,948 inactive customers to whom a total of $16,900 should be refunded, with an average refund of $5.73 per customer.

17.

Bell Canada estimated that locating these remaining inactive customers would cost approximately $170,000 with no guarantee that the process would be successful. It stated that the next step in attempting to locate such customers would be to consult archived microfiche records of their long distance usage and to use that information to attempt to locate them. Bell Canada stated that the cost per inactive account of performing this activity would be approximately $57.
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Relief requested by PIAC

18.

Bell Canada submitted that it had acted reasonably and responsibly in relation to the party-line terminal set overcharging error by acting to determine the cause and scope of the error and developing a refund plan that would provide a full refund, with interest and an apology, to the vast majority of affected customers. Bell Canada stated that it did not publicize the error internally or externallyuntil it was able to carry out the appropriate analysis and construct a refund program in order to avoid frustrating customers and increasing the administrative burden on the company.

19.

Bell Canada stated that when inquiries were made by PIAC concerning the appropriate tariff rate, the correct answer was SIZE="3">given in most cases. In response to PIAC's assertion that it was not informed by Bell Canada of the error and the refund plan, Bell Canada stated that it understood that the PIAC employee was seeking information in the context of charges on a particular customer's bill.

20.

Bell Canada submitted that most of the relief requested by PIAC was inappropriate and potentially outside the Commission's jurisdiction.

21.

Bell Canada was of the view that an order directing it to provide a customer rebate with interest was unnecessary as it was committed to providing refunds with interest.

22.

Bell Canada submitted that it would be unreasonable to require it to pay punitive damages to customers because the error was not a result of wilful negligence or deliberate fraud. Bell Canada indicated that it was already incurring the cost of repaying the overcharged amount with interest, the cost of administering the refund and the negative impact on its reputation.

23.

Bell Canada indicated that a party is generally required to post security when there is doubt about its ability to satisfy future monetary orders due to impecuniosity or flight from the jurisdiction. Bell Canada maintained that neither eventuality is likely and that, accordingly, requiring security would be inappropriate.

24.

Bell Canada submitted that it takes all reasonable steps to assess its compliance with regulatory requirements on an ongoing basis and that there is no evidence to suggest that independent audits are necessary. In relation to party-line terminal sets, Bell Canada further submitted that it acted at all times in a responsible and straightforward manner, discovering the error on its own and responding appropriately. Finally, Bell Canada submitted that there was no evidence of carelessness or bad faith on the part of the company that would warrant the imposition of an additional reporting requirement SIZE="3">.
 

Commission analysis and determination

25.

The Commission notes that Bell Canada has provided full refunds, with interest, to over 90% of the customers overcharged for party-line terminal sets and that 98% of the amount overcharged has been refunded to these customers. The Commission considers that Bell Canada has provided appropriate compensation for its error to affected customers that the company could locate, in accordance with Article 19 of its Terms of Service.

26.

The Commission notes that, despite its attempts to locate customers through information on customer profiles, Bell Canada could not locate 2,948 inactive customers to whom it owed an average refund of $5.73 per customer. The Commission further notes that Bell Canada indicated that consulting archived records of long distance usage to locate these customers would cost approximately $57 per inactive account. In view of the costs associated with taking further steps to locate these customers in relation to the amount to be refunded and the possibility that these customers may not be located even if such steps are taken, the Commission finds that Bell Canada has made a reasonable effort to locate these customers. The Commission, however, directs that the remaining balance of $16,900 not refunded to customers be added to the company's deferral account established in Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002.

27.

The Commission notes that PIAC requested that the Commission order Bell Canada not merely to reimburse affected customers, but also to further compensate customers for the improper charges by way of an additional credit to their accounts. The Commission considers that PIAC's request that Bell Canada pay further compensation is a request for punitive damages. The Commission considers that paragraph 55(c) of the Act, which states that the Commission has the power of a superior court with respect to the enforcement of its decisions, does not confer on the Commission sufficient jurisdiction for it to be able to make such an order. Moreover, the Commission considers the compensation provided by Bell Canada was reasonable and that further compensation would not be appropriate.

28.

The Commission notes PIAC's general concern regarding Bell Canada's ongoing compliance with tariffs. The Commission further notes that it addressed issues pertaining to regulatory compliance by incumbent telephone companies in Measures with respect to incumbent telephone company regulatory compliance, Telecom Public Notice CRTC 2003-4, 10 April 2003. In that public notice, the Commission referred to a number of instances of deliberate regulatory non-compliance by incumbent telephone companies and announced that it would designate inspectors, pursuant to section 71 of the Act, for the purpose of verifying compliance with the Act and its decisions.

29.

The Commission considers that Bell Canada's errors, which resulted in the company overcharging for party-line terminal sets, were inadvertent and that the company has made all appropriate corrections to ensure correct billing in the future. In the circumstances, the Commission considers that requiring Bell Canada to undergo an audit or file compliance reports would be inappropriate.

30.

As it is unlikely that Bell Canada would be unable to satisfy future monetary orders due to impecuniosity, the Commission considers that a requirement for the company to post security would not be appropriate.

31.

The Commission notes that PIAC was of the view that, under Article 19 of Bell Canada's Terms of Service, Bell Canada would only be required to compensate customers who dispute incorrect charges. Accordingly, PIAC requested that the Commission direct Bell Canada to revise the company's Terms of Service such that all overcharged customers would receive a refund, not just those who dispute the improper charge.

32.

Article 19.1 of Bell Canada's Terms of Service is reproduced below:
 

In the case of a recurring charge that should not have been billed or that was overbilled, a customer must be credited with the excess back to the date of the error, subject to applicable limitation periods provided by law. However, a customer who does not dispute the charge within one year of the date of an itemized statement which shows that charge correctly, loses the right to have the excess credited for the period prior to that statement.

33.

For purposes of clarification, the Commission notes that, pursuant to the first sentence of Article 19.1, Bell Canada is obliged to adhere to its tariffs and is required to correct any billing errors that it discovers, even where a customer has not complained. The Commission notes that the second sentence of Article 19.1 requires that customers dispute a charge in order to receive compensation only in cases where they have received an itemized statement that shows the charge correctly. The Commission considers that, in the present case, customers received incorrect rate references on their bills due to the conversion error and the second sentence of Article 19.1 was therefore not applicable.

34.

Finally, the Commission considers that investigation of other telephone companies is unnecessary as there is no evidence on the record of this proceeding that would suggest that other telephone companies would have made similar errors with respect to rates for party-line rental sets.

35.

In light of the above, the Commission finds that Bell Canada has taken reasonable steps to locate overcharged customers and has provided appropriate compensation to such customers as it could locate. The Commission also finds that the further relief requested by PIAC would be inappropriate under the circumstances. Accordingly, the Commission denies PIAC's application.

36.

The Commission, however, notes that, in Public Interest Advocacy Centre - Application for costs - Part VII application by PIAC for enforcement and relief regarding Bell Canada's unauthorized rate increases to party-line rental sets, Telecom Costs Order CRTC 2003-10, 19 September 2003, it approved an application by PIAC for costs with respect to its participation in this proceeding.
  Secretary General
  This document is available in alternative format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca

Date Modified: 2004-02-12

Date modified: